BANGKOK residents are flocking to shopping centres in their downtime - which bodes well for the city’s retailers, according to a new report from a regional real estate consultancy.
Retailers could expect their average rents to hold steady or even dip, “as new tenants pay their rents with a percentage of their gross profit”, said Edmund Tie & Co Research, adding that the footfall will give a gradual lift to downtown and mid-town occupancy.
The shopping spaces now in the pipeline for Bangkok are largely integrated with mixed-use developments and could also draw traffic from office workers and condominium, hotel and serviced apartments residents in the same projects, the report noted.
These new malls include the downtown developments I Am Chinatown, Sindhorn Village and Samyan Mitrtown, which will add more than 50,000 square metres of net lettable area (NLA) when construction finishes in 2019. Their completion will come on the heels of The Market Bangkok and Donki Mall Thonglor, which contributed close to 75,000 sq m of NLA in the first quarter of the year.
Downtown retail occupancy stood at 94.8 per cent as at end-March, up from 94 per cent the previous quarter. These spaces clocked 2,600 baht (S$110) per sq m in average monthly rents. Meanwhile, average rents came in at 1,615 baht per sq m in the mid-town area, where occupancy rose from 89.8 per cent to 90.4 per cent over the same period.
Private home growth in the mid-town and suburban districts has driven retail development in these areas as well, with new projects expected to add another 175,000 sq m of retail space by end-2019, the report added.
Still, the Edmund Tie & Co researchers flagged the challenge posed by e-commerce in Bangkok’s “highly competitive retail environment”.
“We expect retailers to adopt strategies that fit the current retail environment,” they said, without elaborating.